Hedge funds are discovering new makes use of for cryptoassets that don’t contain funding, per a brand new report, with litecoin (LTC) earmarked as an unlikely altcoin champion for funds.
These have been the findings of a joint analysis paper launched by PwC and Elwood Asset Administration and shared with Cryptonews.com, entitled the Annual Crypto Hedge Fund Report. The authors estimate that belongings below administration of crypto hedge funds globally doubled in 2019, to over USD 2 billion.
In the meantime, hedge funds, per the report, are more and more participating in staking and lending, in addition to crypto borrowing, with staking accounting for 42% of hedge funds’ non-investment actions.
The report’s authors say that proof gathered from research of hedge funds in Q1 of the present monetary 12 months has discovered that different altcoin winners have been additionally rising.
They write,
“Litecoin was talked about by funds as one among their prime traded altcoins regardless of its market cap being comparatively smaller than the opposite talked about altcoins. This additionally applies to zcash (ZEC) and ethereum classic (ETC), however to a lesser extent.”
Litecoin is ranked seventh by market capitalization (sixth if the tether (USDT) stablecoin is excluded), but it surely shares the third place with XRP, ranked third by market capitalization, as probably the most traded altcoins.
Regardless, when requested to call their prime 5 traded altcoins by each day quantity (excluding stablecoins), 67% of fund managers named ethereum (ETH).
The authors additionally say there have been adjustments in the way in which that crypto hedge funds – and their standard counterparts, make use of crypto derivatives.
They state,
“Over the previous 12 months, we’ve got seen additional developments within the crypto lending market. As an example, many centralized and decentralized crypto trade platforms at the moment are offering lending and margin buying and selling options to their clients. Due to this fact, flash loans and rate of interest arbitrage have gotten extra frequent.”
This has had some fascinating knock-on results, they famous, including, that “it implies that we’re seeing a more in-depth correlation between funding methods at crypto hedge funds and conventional hedge funds.”
Henri Arslanian, PwC’s World Crypto Chief, added that buyers are literally beginning to take coronary heart from regulators’ actions.
“The adjustments the crypto hedge fund business has seen up to now 12 months, from extra regulatory readability to the accelerated implementation of greatest practices, are nice examples of how briskly the business is turning into more and more institutionalized,” he stated.
Arslanian expects that the crypto hedge fund business to develop considerably over the approaching years as investing in a crypto fund could also be “the best and most acquainted entry level for a lot of institutional buyers coming into this house.”
He concluded that “skilled finance professionals” proceed to “enter the crypto house because the business evolves and matures” – a reality that’s offering “consolation not solely to institutional buyers however to regulators as nicely.”
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Different findings within the report:
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